The first step in solving a money problem is determining the kind of problem you’re dealing with.

2 kinds of money problems

A money problem may be a puzzle or a mystery.

A puzzle is a money problem with a fixed solution. You can quantify it. It can be solved in one or more tangible steps. Like a jigsaw puzzle – as more information is secured, clarity increases.

A mystery is a money problem with a moving solution. The solution is fuzzy. In fact, you don’t actually solve a mystery. You frame it. Like a game – more information increases the difficulty of solving the problem.

An example of each type of money problem

Example 1

“I need additional liquidity in case the unforeseen happens.”

Your solution to this may be: “Save $1,000.”

To accomplish it, you may save an extra $100 from your next 10 paychecks.

It’s a puzzle.

Example 2

“I want to retire comfortably.”

How do you define “comfortably”? How much money does that require?

Your answer will be driven by factors like:

– At what age do you plan to retire?

– How long do you think you will live?

– Will you be in good health until you pass on?

There are a lot of contingencies here.

It’s a mystery.

And here’s an important point – quoted directly from the post:

“Our most consequential money problems are mysteries.”

Does this only apply to money problems?

No. It applies to all areas of your life. For example, think about a career.

“I need to get a degree” is a puzzle.

But where will you be in your career in 10 years? That’s a mystery for most.

How do you solve a mystery?

We love this conversation about puzzles and mysteries because it reinforces what we often say:

In a rapidly changing, uncertain word, you must learn to think like an entrepreneur. Even if you never plan to own your own business, you own your life.